China Construction Bank has purchased a US$100 million stake in Russia’s VTB Bank, to expand its business in Russia after it set up a subsidiary in Moscow.

VTB completed a sale of its new shares to private investors and sovereign wealth funds from Norway, Qatar and Azerbaijan, raising approximately US$3.3 billion, giving Russia’s lender much-needed capital for expansion, despite weak market demand for it’s shares.

The deal for state-controlled VTB comes as the Kremlin’s push to sell off more state-owned assets is facing headwinds as Russian share prices are at their lowest levels since June 2012.

Three sovereign funds from oil-rich countries together bought over 60% of the new shares, in course of the deal. Norges Bank Investment Management bought more than US$500 million of shares, while Qatar Holding LLC and the State Oil Fund of Azerbaijan each bought about US$500 million of shares.

VTB Bank president and chairman of the management board, Andrey Kostin, said: "The agreement will not only bring relations between our banks to a new level but will also promote cooperation between our countries. China has traditionally been a strategic partner of Russia."

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